India's inflation hits 13-year peak

---

NEW DELHI, Aug 23 (AFP): India's inflation has accelerated to a 13-year peak, official data showed, fuelling expectations of more monetary tightening.

Annual inflation jumped to 12.63 per cent for the week ended August 9, from 12.44 per cent for the previous week, according to the Wholesale Price Index, India's most-watched cost-of-living monitor.

The inflation rise announced late last week was in line with analysts' forecasts, but far above the central bank's end-of-year target of seven per cent.

The increase was bad news for the ruling Congress-led coalition, which is anxious to control prices. It fears a backlash in national elections due by May 2009 from the poor masses, who have been hardest hit by price rises.

Inflation has nearly tripled from 4.39 per cent a year ago, reaching its highest level since the current inflation series began being compiled 13 years ago.

The Reserve Bank of India has raised rates three times since June in a continuation of an aggressive tightening policy that began in 2004 and which has slowed growth in Asia's third-largest economy. The bank's key short-term lending is now at nine per cent -- a seven-year high.

Last week, Prime Minister Manmohan Singh's economic advisory council forecast inflation could reach 13 per cent before beginning to taper. But some private economists have said it could hit 15 per cent.

The council warned that high inflation in tandem with the global economic downturn could slow India's growth to 7.7 per cent in the financial year to March 2009 -- its weakest in four years.

The economy expanded by nine per cent last year and 9.6 per cent the previous year.

Analysts say they expect at least one more round of monetary tightening before inflation starts to stabilise.